Value
5.4/10data confidence 67%| Component | Sub-score |
|---|---|
| P/S | 5.9 |
| EV/EBITDA | 1.2 |
| p ocf | 6.5 |
| Analyst target | 6.0 |
- ▸P/OCF: 16.8x (FFO proxy — REITs gated off P/E)
SUI · Why this verdict
Why Sun Communities (SUI) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.3/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Sun Communities has beaten earnings estimates in 3 of the last 4 quarters with an average surprise of 54% and sits at the top of its industry for margins and growth, but trades within 3% of analyst targets and has a notable gap between reported earnings and free cash flow generation.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Sun Communities beat earnings in 3 of the last 4 quarters with an average surprise of 54%, including a 168% beat in February 2026 and 52% beat in October 2025, suggesting analysts consistently underestimate the company's quarterly earnings power. Earnings | The company beats earnings estimates in at least 3 of the next 4 quarters, sustaining the current beat pattern with average positive surprises above 20%. | →Stable |
| CounterThe most recent quarter missed by 26%, and large beats in prior quarters may have been driven by non-recurring items; analysts may already be adjusting estimates upward, making future beats harder. | ||
Sun Communities earns 60% net margins, is classified as an industry growth leader, and ranks in the top tier for margins among residential REITs, indicating a high-quality portfolio of manufactured home and RV communities with strong pricing power. Peer-rank breakdown | Net margins remain above 50% over the next 12 months, confirming the current level is not temporarily elevated. | Tripped→Stable |
| CounterA 60% net margin in a REIT often reflects depreciation and amortization accounting rather than economic earnings; the cash flow picture, where FCF is only 38% of net income, tells a more constrained story. | ||
Free cash flow is only 38% of net income, flagged as a red flag in the quality assessment, meaning the company is generating substantially less cash than its income statement suggests, which constrains actual dividend coverage and capital reinvestment capacity. Quality breakdown | Free cash flow as a percentage of net income improves to above 60% within 12 months, narrowing the gap between reported earnings and cash generation. | →Stable |
| CounterREITs by definition have heavy real property asset bases requiring reinvestment; a FCF-to-earnings ratio well below 100% is structurally expected in the sector, and funds from operations is a more relevant metric than GAAP FCF. | ||
The stock is trading at $124.41, only 2.7% below the analyst consensus target of $127.80, meaning the market has already priced in nearly all of the near-term fundamental improvement that analysts expect. Targets | Analyst consensus price target rises above $140, more than 12% above the current price of $124.41, reflecting upward estimate revisions driven by continued earnings beats. | ↑Improving |
| CounterResidential REIT stocks can trade above analyst targets for extended periods when interest rate expectations improve; the 3-quarter beat streak may drive analyst upgrades rather than a price pullback. | ||
Sun Communities beat earnings in 3 of the last 4 quarters with an average surprise of 54%, including a 168% beat in February 2026 and 52% beat in October 2025, suggesting analysts consistently underestimate the company's quarterly earnings power.
→StableEarnings
- Expectation
- The company beats earnings estimates in at least 3 of the next 4 quarters, sustaining the current beat pattern with average positive surprises above 20%.
CounterThe most recent quarter missed by 26%, and large beats in prior quarters may have been driven by non-recurring items; analysts may already be adjusting estimates upward, making future beats harder.
Sun Communities earns 60% net margins, is classified as an industry growth leader, and ranks in the top tier for margins among residential REITs, indicating a high-quality portfolio of manufactured home and RV communities with strong pricing power.
Tripped→StablePeer-rank breakdown
- Expectation
- Net margins remain above 50% over the next 12 months, confirming the current level is not temporarily elevated.
CounterA 60% net margin in a REIT often reflects depreciation and amortization accounting rather than economic earnings; the cash flow picture, where FCF is only 38% of net income, tells a more constrained story.
Free cash flow is only 38% of net income, flagged as a red flag in the quality assessment, meaning the company is generating substantially less cash than its income statement suggests, which constrains actual dividend coverage and capital reinvestment capacity.
→StableQuality breakdown
- Expectation
- Free cash flow as a percentage of net income improves to above 60% within 12 months, narrowing the gap between reported earnings and cash generation.
CounterREITs by definition have heavy real property asset bases requiring reinvestment; a FCF-to-earnings ratio well below 100% is structurally expected in the sector, and funds from operations is a more relevant metric than GAAP FCF.
The stock is trading at $124.41, only 2.7% below the analyst consensus target of $127.80, meaning the market has already priced in nearly all of the near-term fundamental improvement that analysts expect.
↑ImprovingTargets
- Expectation
- Analyst consensus price target rises above $140, more than 12% above the current price of $124.41, reflecting upward estimate revisions driven by continued earnings beats.
CounterResidential REIT stocks can trade above analyst targets for extended periods when interest rate expectations improve; the 3-quarter beat streak may drive analyst upgrades rather than a price pullback.
Per-dimension breakdown
Quality
4.6/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 0.6 |
| ROA | 1.7 |
| Gross margin | 6.7 |
| Op margin | 9.3 |
| Net margin | 0.0 |
| Current ratio | 2.4 |
| FCF quality | 6.0 |
| Moat | 6.0 |
| Piotroski F | 8.9 |
- ▸FCF-positive but moderate margins (FCF margin 80%, FCF yield 12.4%)
- ▸Strong Piotroski F-Score: 8/9
Growth
6.2/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 2.5 |
| EPS growth | 10.0 |
Momentum
2.2/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 0.0 |
| OBV | 5.2 |
| MA position | 1.5 |
| Volume | 0.0 |
- ▸Below 200-MA, MA slope flat
Sentiment
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 4.5 |
| Analyst rating | 7.5 |
| Price target | 7.5 |
Insider
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| insider conviction | 2.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸Modest insider selling — $5,958,000 (0.039% of mkt cap)
- ▸Institutions accumulating
Peer rank
3.2/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 3.0 |
| quality rank | 0.7 |
| growth rank | 1.9 |
Technical
8.4/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 8.2 |
| support resistance | 9.4 |
| 52w position | 7.5 |
Risk (lower is worse)
6.6/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.7 |
| days to cover | 8.6 |
| volatility | 6.3 |
| put call | 6.7 |
| implied vol | 5.3 |
| max pain risk | 3.0 |
| beta | 8.4 |
| debt equity | 6.6 |
- ▸Above max pain $95
Catalyst
6.4/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| dividend safety | 5.8 |
| news activity | 6.0 |
- ▸Strong earnings: 3B/1M
- ▸Dividend: 3.6%
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (4)
- INSIDER:OK
- EARNINGS_PROXIMITY:76d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (4)
- MOMENTUM:2.2<4.5
- ASYMMETRY:1.3<1.5@spot
- DEATH_CROSS:HARD_BLOCK
- 8K_CRITICAL:4.01,4.01
Warning (0)
none
Reward-to-Risk
1.29
Upside
+6.4%
Downside
5.0%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 5.3 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Technical at 8.4) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( MOMENTUM:2.2<4.5, ASYMMETRY:1.3<1.5@spot, DEATH_CROSS:HARD_BLOCK) reinforce the read. Current asymmetry R:R is 1.29 — supplementary context, not the trigger for this path.
The strongest dimensions are Technical at 8.4, Risk (lower is worse) at 6.6, and Sentiment at 6.5; the weakest are Momentum at 2.2, Peer rank at 3.2, and Quality at 4.6. The V9 engine flagged 4 failed gates, producing an asymmetric reward-to-risk of 1.29 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Strong Earnings Beat Large Surprises
Trip ifEPS surprise falls below 0% in at least 3 of the next 4 quarters, reversing the current strong beat pattern.
- P2Best In Class Reit Margins GrowthTripped
Trip ifNet margin falls below 40%, declining more than 20 percentage points from the current 60% level.
- P3Fcf Quality Gap
Trip ifFree cash flow as a percentage of net income falls below 20%, worsening more than 18 percentage points from the current 38%.
- P4Limited Upside At Analyst Target
Trip ifPrice drops below $112, more than 10% below the current $124.41, suggesting the market is revising the fundamental outlook lower.